Wal-Mart Earnings Key For Retail (WMT, COST, TGT)

February 16, 2008 by Douglas A. McIntyre

Tuesday we’ll get to see earnings out of Wal-Mart Stores Inc. (NYSE: WMT). The estimates from First Call are $1.02 EPS on $106.9 billion in revenues.  Next quarter estimates are $0.74 EPS on $92.29 billion in revenues. Estimates for fiscal Jan-2009 are $3.43 EPS on $405.81 billion in revenues.

Analysts have an average price target north of $54.00.  We are not using options as a guide because expiration is a month out and we just rolled after yesterday’s options expiration date.  At $49.44 this one has held up quite well and has done far better than many troubled retailers.  Wal-Mart’s chart is probably offering quite a bit of support as its 50-day moving average is $48.44 and its even more firm 200-day moving average is $46.50. 

What a difference a year makes.  A year ago we were all calling for Lee Scott to step down after years of not performing, but now it seems he can operate well in a slow economy when other stores can’t torpedo his efforts as easily with a flood of better off clients.   

What is interesting about Wal-Mart is that it has been a winner in the slowing economy.  Sure, its last sales barely grew for same store sales.  But as the nation gets more strapped for cash, feels less optimistic, and is generally more fearful of the future, it seems that they are heading over to Wal-Mart more and more.  The company needs to be very careful not to cut too much.  While we do expect some figures for the periods ahead, we actually won’t be surprised if the discount retail giant holds off on many long-term targets.

Besides every single retailer in the country watching, y9ou can imagine that CostCo Wholesale (NASDAQ: COST) and Target Corp. (NYSE: TGT) are going to be paying close attention to Lee Scott & Friends.

Wal-Mart Stores Inc.’s 52-week trading range is $42.09 to $51.48.

Jon C. Ogg
February 16, 2008